A Surtax On The Top 1% (This is a very bad way to pay for health care reform.)

Forbes ^ | 7/30/2009 | Bruce Bartlett

[SeekAndFind]

It seems almost certain at this point that whatever health reform legislation is ultimately enacted by Congress, its principal funding will come from a surtax on the top 1% or so of taxpayers. This is a very bad idea for reasons that have little to do with the economic effects of taxation.

It's wrong in principle to enact a government program with broad benefits that is so narrowly funded. It ensures that the financing of health reform will be precarious and its political support will rest on a weak foundation. This will make it easier for a future conservative government to gut the program or abolish it altogether as was done with welfare in 1996.

For more than 200 years, economists have generally accepted Adam Smith's basic principles of taxation. The first and most important is this: "The subjects of every state ought to contribute towards the support of the government ... in proportion to the revenue which they respectively enjoy under the protection of the state."

This has come to be called "the benefit principle"--that there should be a linkage between the taxes one pays and the benefits one receives from government. Of course, some taxes will necessarily fund programs for which no direct benefit exists--national defense being the classic example--and some spending will aid those who lack the ability to pay. But that still leaves a lot of government programs that can be financed largely by their beneficiaries.

[ClearCase_guy]

"Say, you're new around here aren't you?"
"Yup."
"Do you mind me asking? What was it that brought you to Galt's Gulch?"
"Well, I tell you -- there was this surtax ..."

[Da Coyote]

Just checked my taxes thus far for the year thru June- close to $30k. Am I thinking of going to a less stressful job for less dough?

Yup. Why ruin my health - when I can look forward to Obamaloon care when I get to retirement?

[MrB]

So, what’s the threshhold on this surtax?

Oh, no problem - I’ll just divide my income across X number of corporate entities until I fall below that number.

[MEGoody]

Bible says we are not to consider one over the other because of how much money they have. It also says we shouldn't steal.

But then, according to Obama, we aren't a Christian nation, so I guess that's why Congress would enact laws that directly contradict biblical instruction.

[econjack]

The first and most important is this: "The subjects of every state ought to contribute towards the support of the government ... in proportion to the revenue which they respectively enjoy under the protection of the state."

This has come to be called "the benefit principle"

No, that's not right. The principle presented here is the "ability to pay" argument. His reference later in the article to the gasoline tax is a proper example of Benefits Received. Any tax tied to income reflects an Ability to Pay approach.

Some taxes, like a property tax, have no reasonable logic to support them. If half of property taxes are used to fund public education and you have no children, the Benefits Received principle fails directly. If you live next to someone who has a home just like yours but he makes ten times more income than you, the Ability to Pay fails, too. A surtax on the "rich" will simply drive those people out of the system, much like we saw in Great Britain in the late 60's.

[Eric in the Ozarks]

Thinking the same thing. Why bust my butt everyday when the big turd will just confiscate it ?

[ClearCase_guy]

The actual principle that Obama is following is the old "To each according to his need, from each according to his ability".

It's wealth redistribution.

[drbuzzard]

After reading through that article I get the distinct feeling that the adage “even a blind squirrel will eventually find the acorn” is in play.

He is correct that the surtax is stupid. His reasoning however is based on the premise that it would be politically unsustainable to use it. This accepts the premise that the health care “reforms” in question are desirable. Other nonsense he feeds along the way are such tripe as “welfare was gutted by the GOP in the 90s” and Social Security is a guaranteed pension or people paying into the ‘trust fund’.

With delusions like that up front, I have trouble buying into anything which comes out of such a chump.

[businessprofessor]

I doubt that such a scheme will pass IRS scrutiny. The rats have hired an army of new auditors and investigators to harrass the most productive. Expect a visit from a brownshirt IRS agent if you try this scheme.

[The Great RJ]

Obama and Congress are very naive to think that top wage earners are just going to roll over and pay this surtax or higher tax rates in general. If you are very wealthy you certainly have the means and now the motivation to start pulling your money out of the US and putting it out of the reach of the IRS. I am certain that wealthy leftists like George Soros and the Martha’s Vinyard crowd as well as the Hollywood elites will not be paying their fair share yet continue to chide us about not making enough sacrifices.

[wastoute]

Any additional tax will just cause the top earners to reduce their income. This is the goal of Zero and his minions. Read Cloward-Piven. This is Zero's real goal. He WANTS us to "go Galt". It won't stop me but we need to understand his game plan and we need to have our own game plan that "wins in the end".

Μολὼν λάβε

[GVnana]

"Fat, drunk and stupid is no way to go through life, son."

But that's the kind of nation we'll have if people have no accountability for their own health.